Gaylor v. Harding

Seymour, J. This, is an action of trover, to recover for the alleged conversion by the defendants of a large amount of property, mostly machinery pertaining to a woolen manufacturing establishment. Both plaintiff and defendants claim title under the Mill River Woolen Manufacturing Company, the original owners of the property. The plaintiff claims as trustee in insolvency by an assignment dated May 23d, 1867, under which the property came into his hands and was duly inventoried. The defendants claim as mortgagees by deed dated September 12th, 1866. None of the property in dispute is particularly described in the mortgage deed, nor enumerated in the schedule thereto attached. The deed was however duly recorded, and general words of description are used which, as between the parties, would embrace and convey all the machinery. After a description of the real estate the deed goes on to say, “ together with all the machinery, tools and implements contained in said buildings; also all machinery, tools and implements which may from time to time be added to or substituted for those now used upon said premises and in said buildings.” Some of the property described in the plaintiff’s declaration is manifestly fixtures, and passes as such with the real estate. For reasons hereinafter stated we shall advise a further enquiry in regard to what of it is real and what personal, and now confine our attention to such of the property as is personal, and the bulk of it is clearly such. By the condition of the mortgage deed the mortgagors [517] were to continue in the possession of the real and personal 'estate and carry on business as they had done, and no possession was taken by the mortgagees until November 20th, 1867, at which time they did take possession of the entire mortgaged premises, including the property in dispute ; and it is for this taking that the present action is brought, claiming the taking to have been unlawful. Two important questions are presented by the record. 1st. Is the conveyance of the property, without possession taken by the mortgagees, good under the circumstances against creditors ? 2. Does the plaintiff as trustee, claiming by assignment from the Mill River Manufacturing Company, stand as a creditor would do who had attached the property, in a position to attack the conveyance ? We have a statute under which a valid mortgage of machinery may be made and the mortgagor still retain possession ; but it is not claimed that this mortgage describes the machinery in the manner and with the particularity which the statute requires. The defendants therefore take no benefit of the provisions of that statute, and the main questions in this case are the same which were decided in Swift v. Thompson, 9 Conn. R., 63, and we are called .upon to say whether we will abide by the rulings in that case or whether we will overrule them. In that case the court were unanimous in holding that the ordinary machinery of a cotton mill is personal estate, and that it is subject to the same rules as other personal property respecting the necessity of a change of possession to perfect the title of the vendee or mortgagee against creditors. As already stated, the bulk of the property for the conversion of which this action is brought is personal, but some of it is obviously parcel of the realty and passes as such with the real estate. The' attention of the committee before whom the cause was tried does not appear to have been directed to a separation of the permanent fixtures from the moveable machinery, and we advise that' a further hearing be had for the purpose of making such separation. In regard to the moveable machinery and other personal property, we think, [518] in the first place, that the law of Connecticut requires that a change of possession should accompany the „mortgage, and without such change the property is open to attachment by creditors of the mortgagor. On this point the case of Swift t. Thompson is, we think, decisive. The two cases are alike, except that in the case of Swift v. Thompson there was no provision in the mortgage itself for continued possession by the mortgagor. We think this difference cannot affect the result. It is the continued possession of the mortgagor by consent of the mortgagee which marks the transaction as constructively fraudulent against creditors, and it can make no difference whether the consent of the mortgagee be, as in the present case, expressed in the writings, or be tacit and implied, as in the case of Swift v. Thompson. Thus far the law of Connecticut has been uniform and unquestioned. But it is strenuously contended that in a case where there is no evidence of actual fraud, and where the fraud is merely con-structive from retention of possession by the mortgagor, an assignee in insolvency is not an attaching creditor, and not entitled to the privileges of such a creditor. The argument is that the assignee takes by conveyance from the mortgagor and therefore takes only the same rights which the mortgagor himself has, and that as the mortgagor cannot set aside his own conveyance so his assignee in insolvency cannot. There are cases where the equity of the assignee in insolvency has been decided to be less than that of an attaching creditor, but such assignee has always been held in this state to be the representative of creditors in respect to treating as void all conveyances actually or constructively fraudulent. In giving the opinion of the court in Rood v. Welch, Judge Sanford says, (28 Conn. R., 163, 4,) “ The possession of the property-being retained by the mortgagor, the mortgage is to be regarded as primd facie fraudulent and void, so that the mortgagee has no title to interpose against the trustee’s claim.” So in 29 Conn. R., 254, the same judge says — “A conveyance which is deemed fraudulent and void against an attaching creditor himself, must be invalid also as against a trustee, who stands in the place of and represents creditors.” [519] These authorities are so decisive that we have no occasion to re-examine the question on principle. The defendants brought a petition to the Superior Court and obtained a decree of foreclosure of their mortgage. The trustee was made party respondent to that petition, but did not appear. The decree is in the usual form, cutting off all rights of redemption. It is now suggested that this decree has some bearing on the rights involved in the trial before us. But the decree does not purport to decide what property passed by the mortgage deed; it only bars all rights of redemption in whatever property the mortgage embraces. The plaintiff here sets up no rights subject to the mortgage, and no rights that can be barred by the decree. The rights which the plaintiff here sets up are in opposition and adverse to the mortgage, and not mere rights to redeem. Another claim was made by the defendant’s counsel, namely, that the trustee had allowed the defendants to take possession of the property, so that they may be regarded as having taken actual possession before suit brought, but the trustee was in possession of the property as such on the 8d of June, 1867, and the possession taken by the defendants was about the 20th of November, 1867. The plaintiff claimed the property in dispute as trustee. We think it clear that he waived none of his rights as such in the transaction alluded to in this claim of the defendants. He merely abstained from resisting the removal of the property by the defendants, leaving them to take it at their peril. We therefore advise that the plaintiff is entitled to judgment for the value of so much of the property described in the declaration as is personal estate ; and advise that a further hearing be had to ascertain whether portions of the property are not permanent fixtures which pass as part of the real estate. In this opinion the other judges concurred.